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Canadian Innergex puts its 54% share in geothermal company HS Orka up for sale

Blue Lagoon with Svartsengi plant, Iceland (Picture: Vestman, (c) CC BY 2.0)
Alexander Richter 24 Oct 2018

Canadian energy company Innergex has set its 53.9% stake in Icelandic geothermal company HS Orka up for sale. The expected value of the share is estimated at around $271 million. The sale includes a 30% share in the Blue Lagoon geothermal spa.

As reported yesterday, Canadian company Innergex is now exploring the sale of its 53.9% stake in Icelandic geothermal energy company HS Orka. The formal sales process has started earlier this month. Among the stakes of the sale is a 30% stake in the geothermal spa of the Blue Lagoon.

The estimated price of the stake for sale is at around ISk 30 billion or around $271 million (at exchange rate of 24 October 2018).

Innergex acquired the stake in HS Orka in the beginning of 2018 with the acquisition of all shares of Canadian energy company Alterra Energy. HS Orka is the third largest energy producer in Iceland and the only privately owned. HS Orka operates two geothermal power plant, Svartsengi with an installed capacity of 75 MW and 190 MW thermal, and Reykjanes with an installed capacity of 100 MW.

As reported by Icelandic paper, Frettabladid, the Investment Brief called Project Thor, sees the planned EBITDA of HS Orka  for 2019 is estimated at USD31 million (around ISK 3.7 billion). There are expectations that the amount though nearly doubles to USD60 million by 2023.

The sale-side advisors are Bank of Montreal and Icelandic advisory Stöplar Advisory. The other shareholders in HS Orka are Jardvarma, owned by 14 different pension funds, with a 33.4% share and the investment fund ORK with 12.7% share. Earlier this month Swiss investment company DC Renewable Energy bought the share of ORK, which still needs the acceptance of Jardvarma, that has a preemptive right in the shares.

DC Renewable Energy is owned by British national Edmund Truell that has worked a long time on a possible transmission connection between the UK and Iceland.

According to sources to the matter, DC Renewable Energy is interested in further expanding its shares in HS Orka and buy the majority share now being sold by Innergex. As possible shareholder in HS Orka, the company would also have a preemptive right for the shares now being sold. According to shareholder agreement, shareholders have preemptive rights on the shareholdings in the company if they are sold to the extent of the shares they hold.

Among the stakes that are part of the sale is a 30% share in the Blue Lagoon. The spa expects around 1.4 million guests in 2019, with an average admission price of EUR 52/ person (at current exchange rate).

The share held by Alterra Energy/ Innergex was put up for sale in May 2017, with the highest offer by Blackstone at ISK 11 billion at the time around $90 million. The sale did though not go through as Jardvarma as other shareholders rejected the offer.

The whole holdings of HS Orka are estimated at ISK 48.4 billion (USD 467 million) at the end of 2017 and the equity valued at ISK 35.5 billion (USD 342 million).

Source: Frettabladid